NATA Educates Membership On Ground Breaking Agreement To Encourage Infrastructure Investment By FBO Industry

NATA EDUCATES MEMBERSHIP ON GROUND BREAKING AGREEMENT TO ENCOURAGE INFRASTRUCTURE INVESTMENT BY FBO INDUSTRY

Alexandria, VA, March 28, 2012 — The National Air Transportation Association (NATA) and the General Aviation Infrastructure and Investment Coalition (GAIIC) are pleased to announce the release of new best practice standards for airport leases with Aeronautical Service Providers. These best practices, developed in conjunction with Airports Council International – North America (ACI-NA), serve to facilitate long-term private investment in on-airport facilities.

The GAIIC was founded early last year by a number of leading FBO companies to assist the general aviation community in driving private on-airport investment and job creation. The chief objective of the coalition was to address the factors inhibiting private investment in general aviation facilities. At some airports, short-term leases may prohibit FBOs from taking advantage of normal commercial tax rules and lending practices regarding depreciation and amortization that would otherwise act to incentivize investment and economic growth. 

“On behalf of the more than 250 FBOs operated by more than 27 owners represented by the GAIIC, I want to thank both ACI and NATA for working towards a best practices document that did not require a legislated mandate for lease term,” said Sam Whitethorn, executive vice president, McBee Strategic Consulting. McBee Strategic Consulting represented the GAIIC in the negotiations with ACI, NATA and others. “The best practices guidance for long-term infrastructure investment provides a consistent framework for private industry to work with local municipalities to develop general aviation infrastructure,” Whitehorn explained.

According to the best practices agreement, the following points allow the needs of both the Airport Sponsor and the Aeronautical Service Provider (ASP) to be met:

• The length of lease terms and other lease provisions should remain a business transaction between the ASP and the Airport Sponsor;
• Amortization schedules that are based on the amount of the airport infrastructure investment, typical commercial amortization and depreciation practices for similar airport development projects, and the particular market environment will allow ASPs greater access to financing and the ability to generate a return on capital expenditure;
• A short lease term negatively impacts the capacity to amortize large investments and the ability to obtain financing for projects and develop a sufficient return on capital; and
• If the term of the lease is shorter than the mutually agreed-to amortization schedule, the lease should include a “buy out” of the unamortized capital investment made by the incumbent ASP at the end of the specified term.

“NATA applauds the cooperative efforts of the GAIIC and ACI-NA that resulted in these best practices,” stated NATA Vice President of Government & Industry Affairs Eric R. Byer. “This process proved the value of open communication between industry stakeholders. These best practices recognize the unique relationship that the FBOs have with our nation’s airports and the value of the private investments made by FBOs in on-airport facilities. NATA believes that airport sponsors and FBOs are great partners in making airports economic drivers for local communities and our nation.” 

To read the GAIIC summary of the best practices agreement with the airport community, please click here.

To read the best practices agreement in its entirety, please click here.

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NATA, the voice of aviation business, is the public policy group representing the interests of aviation businesses before the Congress and federal agencies.